On June 8, 2023, Governor Kay Ivey passed legislation exempting overtime wages earned by full-time hourly employees from Alabama gross income and consequently from Alabama state income tax.
Considering a future for our families beyond our own lifespans can lead to some of the most difficult financial decisions. We want to be here earning a living and guiding our family’s future every step of the way. But the reality, sadly, requires us to make plans in the event of incapacitation and death—plans that simply can’t be wished away.
Protecting your legacy begins with point-by-point estate planning. As a more comprehensive approach to safeguarding your legacy, estate planning can give you greater peace of mind when compared to a relatively simple last will and testament. When it comes to your family’s future, why leave anything to chance? Mystery can create contentious family politics, fracturing or even severing our loved ones from each other in a moment of profound grief.
To achieve the best results and preserve your legacy, it’s vital that you leave no stone unturned. Here are a few simple tips for shoring up your estate while you can.
Make The Hard Choices (Finally)
At certain periods in our lives, we may actually prefer uncertainty. Uncertainty allows us to take our time with a decision so that we can game out the best possible outcome. But, hard as it may be, time is limited, and certain difficult choices have to be made sooner rather than later.
Firstly, you’ll need to assign power of attorney. You’ll also want to designate someone as your durable financial power of attorney. Next, you’ll need to sit down and author a legal will. If you have dependents, you’ll need to assign guardianship in the event of your incapacitation or demise. You likely already know who your immediate next of kin will be, but it’s still important to discuss these matters with them beforehand to prevent any surprising revelations later on.
These steps may seem like larger, abstract choices, but they actually bolster some end-of-life necessities to make your passing easier on your family. This way, your family members can access your medical records and make medical decisions if you’re unable. And by designating beneficiaries, you limit the potential for squabbling, bickering, or grudges among your next of kin.
Roundup Every Asset
Ideally, when designating beneficiaries, you should know where every single asset is going down to the last, loose penny. But both life and fortune can be long enough to forget certain bits of loose change or parcels of property here and there. And you can’t be expected to account for the assets you forgot you owned, can you?
Probate assets (assets without a designated beneficiary) can be sources of deep contention among your surviving family members. For your own peace of mind, and for your grieving family, it’s crucial that you find it all yourself.
Among your anticipated assets, make sure to look for:
- Stock holdings
- Retirement accounts
- Bank accounts
- Insurance policies
- Social media accounts
- Electronic records
Consider a Trust
It’s a common assumption that, once we’re gone, we won’t be able to guide our family’s financial decisions beyond leaving them everything that we own. But thankfully, there is a way to dictate how your legacy is used. By placing your assets into a trust for certain designated beneficiaries, you can set your own terms for how those assets are managed.
Through a trust, you can be absolutely sure that the assets you leave behind go toward the greatest good for your loved ones. Additionally, inheriting lump sums may result in significant taxes or penalties, diminishing your gift and its potency. By forming a trust, you can make limited funds last longer for your next of kin by regulating withdrawal size, age of access, reasoning, and usage.
The size of your estate as you left it vs. the size of your estate as it’s inherited can differ substantially. Here, taxes are to blame. But there are certain steps you can take to transfer the bulk of your wealth without losing a significant portion to taxation.
As of 2021, you will not be taxed for gifts up to $15,000 from one individual to another. As a married couple, you may give gifts of up to $30,000 while also avoiding the gift tax. You can also mitigate future taxes by donating to charitable organizations. This can drastically reduce your tax burden and allow you to transfer more of your wealth to the people you love, whether they’re relatives, friends, or complete strangers.
The most important tip for sound estate planning is: get started today. Tomorrow can quickly turn into next week, next month, next year, and then, too late. Though it might lead to some unpleasant thoughts, by starting and keeping on top of your estate planning today, you give yourself and your family the greatest chance of honoring your legacy of hard work.
For more estate planning tips, Contact Aldridge Borden and Co. today.
Everyone needs a hand from time to time, especially when it comes to making some truly difficult decisions about your end-of-life medical and financial concerns. You’ve worked hard your whole life. But before you lay the burden down, consider one last bit of effort for the ease and wellbeing of your loved ones. For more information about how to maximize your legacy, call Aldridge Borden today at (334) 834-6640.